Reuters International

By Brad Haynes

SAO PAULO (Reuters) - Brazil's government denied plans to suspend a popular housing subsidy on Friday, as the cities minister became the latest member of interim President Michel Temer's cabinet to walk back reported policy changes in a hasty transition.

The minister, Bruno Araujo, pledged to maintain and "improve" the programme, back-pedalling public comments just as the ministers of justice, health and education have done this week.

The flaps have confused policy messages from the new administration, which is planning ambitious economic reforms and renewed austerity, but remains provisional while Rousseff is tried in the Senate for allegedly breaking budget rules.

She stepped aside last week to face trial, but has denied wrongdoing in the case, which could take up to 180 days.

One of Brazil's biggest newspapers, O Estado de S. Paulo, reported on Friday, citing an interview with the minister, that the government had suspended housing programme Minha Casa Minha Vida during a 40-day review.

"Under no conditions would we talk at this point of suspending the Minha Casa Minha Vida programme," Araujo said in a statement published by the ministry. "What we are doing is being cautious, evaluating what we can promise to avoid false hopes."

Shares of MRV Engenharia SA, the biggest homebuilder in the low-income housing programme, dropped nearly 8 percent in early trading before paring losses to 1 percent as the minister waved away concerns.

On Monday, Temer had to assure Brazilians he would keep up a tradition of nominating a prosecutor general recommended by his peers, after the justice minister's comments raised concerns about judicial independence.

The health minister also said the size of the public health system had to be reassessed, before retracting his comments.

His peer in the education ministry said he supported monthly fees for post-graduate courses at federal universities, but then guaranteed that all public universities would remain free.

Geddel Vieira Lima, the secretary of the government, acknowledged on Tuesday that some policy considerations "were being transmitted to society in the wrong way," asking journalists for "patience" amid the transition.

"We've been in the government for two working days and we're being treated like we've been here for years," he said.

(Reporting by Brad Haynes; Additional reporting by Lisandra Paraguassu in Brasilia; Editing by Alistair Bell)

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